Did you retire early before kids went to Uni? How expensive was it?

ex-pat_scot

Same as the above. 
Students require two elements - living expenses and tuition fees.  Tuition fees are fixed (£9250/y) and the living expenses should total roughly the same (simplistically £5000 to £6000 accommodation plus £3000 to £4000 bills, books, food, fun)
1. loan shortfall owing to parental income. Our children are restricted to the minimum £3200/y loan amount, so we are expected to fund the difference. This comes to roughly £5000 - £6000 per child per year. In practice, we pay accommodation bill. This is not really discretionary.
2. letting your child rack up loans. Whilst they can get the tuition plus living loan, they will be expected to pay it back. Most (85% from memory) will never pay back fully. Rates of interest are steep, so there is a huge drag on graduate incomes (effective tax rates for them would be BR 41% and HR 51%).

At the moment we fund accommodation for our children, so they are racking up only £12,500/y each. Roughly £40,000 (3 year course) or £50,000 (4 year course).
We have not yet discussed the long term strategy for them post graduation - frankly I might take a weighted decision depending on their likelihood to have a high enough income threshold to be paying the loan back.
For my 4 children, this would be a grand total of roughly £175,000 or so. 
I can see my options as (a) pay these off (b) instead gift the equivalent as house deposit (c) do nothing.
My early retirement plans would leave me with two starting uni. I'm not yet clear on whether the One More Year will happen or not.

westv

If I had children who ended up going to University and getting better paid jobs I would expect them to pay themselves any tuition costs involved. In the same way that If they ended up paying 40% tax I wouldn't fund the extra they had to pay above 20%.
The only time this might change would be if I was absolutely minted and any payments to them had no affect on my retirement goals.

Alexland

This is a really interesting question as we are also looking to retire before the kids have gone to university and it's a balance between how much of our S&S ISAs gets spent on university versus our own living expenses in early retirement. A lot of it hinges on when we can get access to our pensions as I would expect my TFLS should be enough to cover both mortgage repayment and also a good chunk of university costs. But that's not a lot of use if we can't access pensions until after they have gone. So what really matters is how much we would need to spend that they couldn't get on loans for which the numbers being discussed here are lower than I had expected. Ours should each have at least £18k (in today's spending power) in their JISAs and it's sounding like that might almost be enough for a 3 year (non london) course at £6k pa so no need to use our S&S ISAs? We have their house deposit etc money in our LISAs. I guess they can always work in the holidays (as we had to) if they want extra spending money and it's good to build up CV experience before going for graduate jobs.

fred246

I think the two options are to pay upfront and have no student debt or borrow the max. To pay upfront would have meant me working extra years and ending up poor with poor kids. As it is we all have plenty of cash but with loan repayments for them. They will only pay the loans off if they have fantastic salaries for many years. They have money to buy homes. I can help them as much as possible depending on our finances. Seemed the best way to me.

Albermarle

. loan shortfall owing to parental income. Our children are restricted to the minimum £3200/y loan amount, so we are expected to fund the difference. This comes to roughly £5000 - £6000 per child per year. In practice, we pay accommodation bill. This is not really discretionary.

This is exactly what I did in the same situation . Student loan covered tuition fees and day to day expenses . I paid for the accommodation for three years ( a fourth year was working/learning in a foreign country where there was a salary of sorts )

First year in halls of residence > £6K . . Second year in typical shared ( with 3 others) house in East Midlands City ; £75 a week all in for 11 months . ( so half the cost of the first year )Final year - shared ( with one other ) city centre flat ; £400 per month + bills.

I live in a more expensive location near a Uni and the halls cost about the same ( except the brand new ones) but local accommodation is significantly more expensive than East Midlands. 

MallyGirl

Same here (so far as she is in first year of a 6 year course).
Student loan covers fees and day to day living (£4,289 min maintenance loan). I said we would make up the difference to the max maintenance loan so £4,914 from us. This was almost exactly the same as her halls costs so we paid them. Next year she is in a 9 month let in halls so I expect we will have to pay more (but not have to drive up and back each term emptying her room for the holidays). Uni guarantees halls for the first 4 years and then she will probably move into private accommodation which will be more expensive.
We'll see how the money goes next year as there haven't been many spending opportunities for her this year so second year will be more fresher-like I expect (if allowed by then).
When she was looking at studying in London the suggested hall (self catering) was £10,403 a year 

michaels

If you are retired and living off a mix of isa, drawdown, DB etc then it might be worth taking income from sources that don't count as income for the assessment of parental support (ie ISA) to allow the kid(s) to get the full grant.

I know the official loans are expensive but it is probably worth taking them and waiting till post graduation and start of employment and taking a view on whether your child is likely to be one of the 15% who will pay it all back and then decide whether it is worth paying it off for them or using the same money as a house deposit gift.

Lostweekend

Thank you for all the comments, it's really useful to hear it from experience. So different from my Uni days of grants (I got a full one) and no access to any additional cash - at least you knew where you stood. 

Many contributors have mentioned paying accommodation costs and that seems to make sense.  If we are able to help further it seems sensible to help with cash later if the loans are not going to need to be repaid. That decision can be taken later.

Thanks also Michael for the income-source advice, the family income threshold for contributions is very low.

I have seen many of you contribute to this thread over the last year or so and your input has been invaluable to us, much appreciated.

MallyGirl

It is definitely worth having a play with the ready reckoner when you get a bit closer:
https://www.moneysavingexpert.com/students/student-finance-calculator/
It estimates that my daughter is likely to pay off £28,200 when she will have, by then, borrowed (9250+4289)x6 = £81,234 plus interest!
Obviously there are assumptions in there but she might also travel, work part time and have children, whatever she likes and pay nothing during those periods. It is less clear cut for shorter courses.

Bemma

I'm finding this thread particularly interesting.  I'm 51 with children aged 9 and 12 and would like to retire before 60.

My thinking comes down to the following…
I could use my money so my kids have minimum debt (possibly zero)
Or I could use my money so my kids have a tidy lump sum (LISA) for the start of adult life, but large loan.

So whatever cash I could afford for them, would it be better to reduce their loan or give them that money with a 25% boost into a LISA?

I'm thinking the LISA option.  Having an early boost for a house deposit would relieve a large financial burden and enable my kids to concentrate on their own pension at an early stage, with the early years allowing for a lot more compounding growth.  I think this outweighs the drag of the loan payments, which will initially cost them the same no matter how much they borrow.  And as shown above, they may never pay it off.

If I had more money, I would consider both!  I think I could probably afford to fully fund LISAs for say 5 years, maybe more.  If I get a decade of growth like the last one, my kids will be living in mansions!